Title

New CEOs pursue their own self-interests by sacrificing stakeholder value

Authors

Authors

J. S. Harrison;J. O. Fiet

Comments

Authors: contact us about adding a copy of your work at STARS@ucf.edu

Abbreviated Journal Title

J. Bus. Ethics

Keywords

chief executive officer; executive succession; pension funding; research; and development; self-interested behavior; stakeholders; EXECUTIVE SUCCESSION; PERFORMANCE; MANAGEMENT; OWNERSHIP; FIRM; Business; Ethics

Abstract

Short-term performance increases that are sometimes observed after CEO successions may be evidence of self-interested behavior. New CEOs may cut allocations to long-term investment areas such as research and development (R&D), capital equipment and pension funds in an effort to drive up short-term profits and secure their positions. However, such actions have unfavorable consequences for some stakeholders. This study provides evidence that both R&D and pension funding are reduced subsequent to a succession, even after accounting for industry trends. The expected short-term profitability increases are also observed. A major implication of these results is that boards of directors and other interested parties should carefully monitor the actions of new CEOs with regard to their treatment of R&D and pension funding if they would like to prevent such actions from occurring. This study also highlights the need to investigate other potential self-interested behaviors of new CEOs.

Journal Title

Journal of Business Ethics

Volume

19

Issue/Number

3

Publication Date

1-1-1999

Document Type

Article

Language

English

First Page

301

Last Page

308

WOS Identifier

WOS:000079724300006

ISSN

0167-4544

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